Boston, MA 12/23/2013 (wallstreetpr) – Citigroup Inc (NYSE:C) decided to partner with AIA Group Ltd. The company has decided to offer life insurance through the branch network of AIA Group that is located in 11 countries in the Asia Pacific. Bloomberg has reported that the company made this move because the lender of United States decreases the number of insurance partners in this region.
Agreement
The agreement will enable AIA to sell insurance products to the customers of Citigroup Inc (NYSE:C) in Thailand, Singapore, Vietnam, Indonesia, Korea, Malaysia, India, Australia, Hong Kong, the Philippines and China. In terms of the market value, Hong Kong-based AIA is the third largest insurance firm in the region. This agreement will be valid for a period of fifteen years.
The accord will also allow AIA Group to access the details of account holders of about 34 million individual accounts. The news did not contain any financial details of the agreement, but Bloomberg was told by a source that the deal could garner revenue up to $20 billion, if upfront fees and commissions are taken into account.
Advantage
Analysts think that this is a great advantage for Citigroup Inc (NYSE:C) because they will be getting revenues without any expenses. It is basically getting a new product. The company just need the salespersons and they have number of salespeople.
Companies with the help of this agreement would be able to tap a region that is not penetrated by insurance firms. Citigroup Inc (NYSE:C) once made a statement that only 2.6% of the Asian Pacific population have life insurance which is lower than that of 8.44% in the United States (8.4%) and Europe (3.65%).
Facts
The customer accounts of Citigroup Inc (NYSE:C) had assets worth $218 billion in the Asia Pacific region. Outside North America, Asia is the biggest market of Citigroup. Thus, Asia accounted for 21% of the revenue of the bank in the three months period that ended in September. The reports say that the largest markets of AIA Group are in Hong Kong and Thailand.
